With the rise in stock prices, gold prices are falling, and from the all-time high of over Rs 57,000 per 10 gram have fallen to around Rs 46,000 per 10 gram.
For the last few months, stock markets are on the rise and have crossed the 50,000 level to touch an all-time high level of over 52,000 points. On the other hand, with the rise in stock prices, gold prices are falling, and from the all-time high of over Rs 57,000 per 10 gram have fallen to around Rs 46,000 per 10 gram.
Some investors think that the high level of stock prices is not sustainable and instead of making lump sum investments in stocks, they are preferring gold ETFs to park their investment money hoping that the yellow metal will rise if the stock markets fall.
Here is what market experts suggest about the investments in stocks and gold:
“Gold and shares are different classes of assets. Stock prices are on a high so investors need to be prudent and pick up stocks carefully. Investors should not be over enthused in this buoyant market,” S Ravi former chairman of BSE and Managing Partner of Ravi Rajan & Co.
“Gold prices are sliding but one need not be pessimistic about it. Historically this class of asset has been giving good returns on a yearly basis,” he added.
“A prudent investor would like to have a diversified investment amongst all classes of assets. Diversified portfolio enables investors to mitigate risks associated with each class of assets,” Ravi further said.
Stressing on the need of asset allocation, Vijay L Bhambwani, Head of Research – Behavioural Technical Analysis, Equitymaster said, “We at Equitymaster believe prudent investors must resort to asset allocation. No investor must be “all in” or 100 per cent in equities. At least 20 per cent or higher allocation must be to bullion. Financial markets can be fickle and change their perceptions on a dime. If profit taking comes into equities, gold can bounce back.”
Echoing the importance of investment in gold as part of asset allocation, Harshad Chetanwala, Co-Founder MyWealthGrowth.com said, “The advice may sound generic but it is practical, one should always follow the asset allocation across market cycles. Almost a year ago there was a reverse trend, where stocks were sliding and gold was rising. The opportunity to continue investing in equities for long term still exists even though markets are near all time high. We continue to suggest our investors to hold on with their long term equity investment and do not exit if there is no need for funds at present.”
“From a new equity investment perspective, investors can look at investing 25-30 per cent of their money at present and the rest can be invested gradually over 3 to 4 months. On gold, it should be looked at from the asset allocation perspective. Investors may like to hold on with their plans of investing in gold as it may remain flattish or slide further in future, if the world economy and stock markets continue to do well from here on,” he added.